Forex »

French Deficit Deteriorates

Finances
Share on StockTwits
Published on
www.finances.com
French Deficit Deteriorates

The French Finance Ministry has been busy publishing updates on the economy this morning. Budget information for February shows that the country has once again run a deficit, at €25.7B this is more than double the January deficit of €12.7B.

On a positive note however the French Trade balance has improved. This figure is still a deficit number of €3.4B but it is much improved on January’s €5.6B shortfall and also easily beat the market consensus expectation of €5.3B.

The Export component of the French trade numbers held up well at €36.2B compared with a previous of €36.31B. The improvement was driven by a fall in Imports, this data showed that France imported €39.6B in February compared with an import bill of €41.92B in January.

France is second only to Germany in terms of foreign trade out of the Eurozone, this makes the trade figures all that much more impressive given the rising Euro.

Currently France is playing it’s part in the recovery of the Eurozone and activity has been showing signs of picking up. Today’s fall off in imports however may suggest a cooling in domestic demand which will in turn impact on economic activity and growth prospects. Nevertheless France is running inflation above the Eurozone average at an annualized 0.9%. Growth too is an acceptable 0.8% p.a. while unemployment is running at 10.2% and falling.

France however is dealing with an above average public debt level, while not off the scale at 93.5 percent of GDP it is on the high side for a large mature economy. This morning’s monthly Budget numbers will obviously add to this debt burden, more concerning however is that the rate at which the debt will increase is rising solidly as the French authorities fail to control the situation. Despite being one of the more stable economies in the Eurozone at this time, France would no doubt benefit from further monetary stimulus from the European Central Bank.

Share on StockTwits